Question 1

Which of the following causes a movement along the aggregate demand curve?

Accepted Answer

A)  a fall in wages 
B)  an increase in prices 
C)  an increase in government spending 
D)  a decrease in taxes 
A)  a fall in wages 
B)  an increase in prices 
C)  an increase in government spending 
D)  a decrease in taxes

Question 2

11.3 The Final Equilibrium
Refer to the information provided in Figure 11.6 below to answer the questions that follow.   Figure 11.6
-Refer to Figure 11.6. Suppose the equilibrium output is initially $600 billion. A decrease in the Z factors ________ equilibrium output and ________ the price level.

Accepted Answer

A)  decreases; leaves unchanged 
B)  leaves unchanged; increases 
C)  increases; increases 
D)  increases; decreases 
A)  decreases; leaves unchanged 
B)  leaves unchanged; increases 
C)  increases; increases 
D)  increases; decreases

Question 3

________ shifts the IS curve to the right.

Accepted Answer

A)  An increase in government spending 
B)  A decrease in government spending 
C)  An increase in the price level 
D)  A decrease in the Z factors 
A)  An increase in government spending 
B)  A decrease in government spending 
C)  An increase in the price level 
D)  A decrease in the Z factors

Question 4

The Federal Reserve's policy to "lean against the wind" means that

Accepted Answer

A)  when output is high, the Fed sets a high interest rate. 
B)  when price levels are high, the Fed sets a low interest rate. 
C)  when output is low, the Fed sets a high interest rate. 
D)  when price levels are low, the Fed sets a high interest rate. 
A)  when output is high, the Fed sets a high interest rate. 
B)  when price levels are high, the Fed sets a low interest rate. 
C)  when output is low, the Fed sets a high interest rate. 
D)  when price levels are low, the Fed sets a high interest rate.

Question 5

An increase in aggregate demand when the economy is operating ________ is likely to result in an increase in the overall price level and ________ in output.

Accepted Answer

A)  below full capacity; a decrease 
B)  below full capacity; no increase 
C)  at full capacity; a decrease 
D)  at full capacity; no increase 
A)  below full capacity; a decrease 
B)  below full capacity; no increase 
C)  at full capacity; a decrease 
D)  at full capacity; no increase

Question 6

________ shifts the Fed rule to the left.

Accepted Answer

A)  An increase in government spending 
B)  A decrease in government spending 
C)  An increase in the price level 
D)  A decrease in the Z factors 
A)  An increase in government spending 
B)  A decrease in government spending 
C)  An increase in the price level 
D)  A decrease in the Z factors

Question 7

Which of the following will, unambiguously, decrease the price level?

Accepted Answer

A)  an increase in government spending and an increase in the Z factors 
B)  a decrease in government spending and an increase in the Z factors 
C)  an increase in government spending and a decrease in the Z factors 
D)  a decrease in government spending and a decrease in the Z factors 
A)  an increase in government spending and an increase in the Z factors 
B)  a decrease in government spending and an increase in the Z factors 
C)  an increase in government spending and a decrease in the Z factors 
D)  a decrease in government spending and a decrease in the Z factors

Question 8

Which of the following will, unambiguously, decrease the price level?

Accepted Answer

A)  an increase in government spending and an increase in costs 
B)  an increase in government spending and a decrease in costs 
C)  a decrease in government spending and an increase in costs 
D)  a decrease in government spending and a decrease in costs 
A)  an increase in government spending and an increase in costs 
B)  an increase in government spending and a decrease in costs 
C)  a decrease in government spending and an increase in costs 
D)  a decrease in government spending and a decrease in costs

Question 9

The Federal Reserve's policy to "lean against the wind" means that

Accepted Answer

A)  interest rates are decreased as the economy expands. 
B)  reserve requirements are decreased as the economy expands. 
C)  reserve requirements are decreased significantly during an economic expansion. 
D)  interest rates are increased gradually as the economy expands. 
A)  interest rates are decreased as the economy expands. 
B)  reserve requirements are decreased as the economy expands. 
C)  reserve requirements are decreased significantly during an economic expansion. 
D)  interest rates are increased gradually as the economy expands.

Question 10

Other things equal, an increase in the price level ________ the equilibrium interest rate and ________ equilibrium output.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 11

When the aggregate supply curve is ________ the price of factors of production is fixed, with little or no upward pressure on price.

Accepted Answer

A)  horizontal 
B)  vertical 
C)  upward sloping 
D)  downward sloping 
A)  horizontal 
B)  vertical 
C)  upward sloping 
D)  downward sloping

Question 12

A decrease in the price of inputs shifts the AS curve to the left.

Accepted Answer

A) True 
 B)False

Question 13

The Fed is leaning against the wind when it sets a high interest rate during a recession.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the information provided in Figure 11.4 below to answer the questions that follow.   Figure 11.4
-Refer to Figure 11.4. During the 2008-2009 recession, many firms in the United States reduced investment in new capital. If the economy was originally at Point A, this would have caused a movement to Point

Accepted Answer

A)  E. 
B)  B. 
C)  C. 
D)  D. 
A)  E. 
B)  B. 
C)  C. 
D)  D.

Question 15

To decrease output the government could adopt policies that

Accepted Answer

A)  increase aggregate supply and aggregate demand. 
B)  decrease aggregate supply and aggregate demand. 
C)  increase aggregate supply and decrease aggregate demand. 
D)  decrease aggregate supply and increase aggregate demand. 
A)  increase aggregate supply and aggregate demand. 
B)  decrease aggregate supply and aggregate demand. 
C)  increase aggregate supply and decrease aggregate demand. 
D)  decrease aggregate supply and increase aggregate demand.

Question 16

The aggregate demand curve shows that, ceteris paribus, at ________ price levels total quantity demanded is ________.

Accepted Answer

A)  higher; higher 
B)  lower; lower 
C)  lower; higher 
D)  positive; negative 
A)  higher; higher 
B)  lower; lower 
C)  lower; higher 
D)  positive; negative

Question 17

An increase in the price of inputs will most likely lead to a higher price level.

Accepted Answer

A) True 
 B)False

Question 18

The quantity of output supplied at different price levels is represented by the

Accepted Answer

A)  production function. 
B)  aggregate demand curve. 
C)  aggregate supply curve. 
D)  aggregate expenditures curve. 
A)  production function. 
B)  aggregate demand curve. 
C)  aggregate supply curve. 
D)  aggregate expenditures curve.

Question 19

11.5 The Long-Run AS Curve
Refer to the information provided in Figure 11.7 below to answer the questions that follow.   Figure 11.7
-Refer to Figure 11.7. Which of the following statements characterizes an output level of $800 billion?

Accepted Answer

A)  It is sustainable over the long run without inflation. 
B)  It is achievable only in the long run. 
C)  It is attainable in the short run but it is associated with increases in the price level. 
D)  It can be achieved only if investment is independent of the interest rate. 
A)  It is sustainable over the long run without inflation. 
B)  It is achievable only in the long run. 
C)  It is attainable in the short run but it is associated with increases in the price level. 
D)  It can be achieved only if investment is independent of the interest rate.

Question 20

All else equal, when output is low, the Fed favors a higher interest rate than it would in a high-output economy.

Accepted Answer

A) True 
 B)False

Which of the following causes a movement along the aggregate demand curve?

11.3 The Final Equilibrium Refer to the information provided in Figure 11.6 below to answer the questions that follow. Figure 11.6 -Refer to Figure 11.6. Suppose the equilibrium output is initially $600 billion. A decrease in the Z factors equilibrium output and the price level.

________ shifts the IS curve to the right.

The Federal Reserve's policy to "lean against the wind" means that

An increase in aggregate demand when the economy is operating is likely to result in an increase in the overall price level and in output.

________ shifts the Fed rule to the left.

Which of the following will, unambiguously, decrease the price level?

Which of the following will, unambiguously, decrease the price level?

The Federal Reserve's policy to "lean against the wind" means that

Other things equal, an increase in the price level the equilibrium interest rate and equilibrium output.

When the aggregate supply curve is ________ the price of factors of production is fixed, with little or no upward pressure on price.

A decrease in the price of inputs shifts the AS curve to the left.

The Fed is leaning against the wind when it sets a high interest rate during a recession.

To decrease output the government could adopt policies that

The aggregate demand curve shows that, ceteris paribus, at price levels total quantity demanded is .

An increase in the price of inputs will most likely lead to a higher price level.

The quantity of output supplied at different price levels is represented by the

11.5 The Long-Run AS Curve Refer to the information provided in Figure 11.7 below to answer the questions that follow. Figure 11.7 -Refer to Figure 11.7. Which of the following statements characterizes an output level of $800 billion?

All else equal, when output is low, the Fed favors a higher interest rate than it would in a high-output economy.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 11: The Determination of Aggregate Output, the Price Level, and the Interest Rate

Which of the following causes a movement along the aggregate demand curve?

11.3 The Final Equilibrium Refer to the information provided in Figure 11.6 below to answer the questions that follow. Figure 11.6 -Refer to Figure 11.6. Suppose the equilibrium output is initially $600 billion. A decrease in the Z factors ________ equilibrium output and ________ the price level.

________ shifts the IS curve to the right.

The Federal Reserve's policy to "lean against the wind" means that

An increase in aggregate demand when the economy is operating ________ is likely to result in an increase in the overall price level and ________ in output.

________ shifts the Fed rule to the left.

Which of the following will, unambiguously, decrease the price level?

Which of the following will, unambiguously, decrease the price level?

The Federal Reserve's policy to "lean against the wind" means that

Other things equal, an increase in the price level ________ the equilibrium interest rate and ________ equilibrium output.

When the aggregate supply curve is ________ the price of factors of production is fixed, with little or no upward pressure on price.

A decrease in the price of inputs shifts the AS curve to the left.

The Fed is leaning against the wind when it sets a high interest rate during a recession.

To decrease output the government could adopt policies that

The aggregate demand curve shows that, ceteris paribus, at ________ price levels total quantity demanded is ________.

An increase in the price of inputs will most likely lead to a higher price level.

The quantity of output supplied at different price levels is represented by the

11.5 The Long-Run AS Curve Refer to the information provided in Figure 11.7 below to answer the questions that follow. Figure 11.7 -Refer to Figure 11.7. Which of the following statements characterizes an output level of $800 billion?

All else equal, when output is low, the Fed favors a higher interest rate than it would in a high-output economy.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

11.3 The Final Equilibrium Refer to the information provided in Figure 11.6 below to answer the questions that follow. Figure 11.6 -Refer to Figure 11.6. Suppose the equilibrium output is initially $600 billion. A decrease in the Z factors equilibrium output and the price level.

An increase in aggregate demand when the economy is operating is likely to result in an increase in the overall price level and in output.

Other things equal, an increase in the price level the equilibrium interest rate and equilibrium output.

The aggregate demand curve shows that, ceteris paribus, at price levels total quantity demanded is .